SEAOIL PETROLEUM CORPORATION vs. AUTOCORP Autocorp.
Seaoil claims that the real transaction is that Uniline,
GROUP and PAUL Y. RODRIGUEZ
FACTS:
Petitioner Seaoil Petroleum Corporation purchased one unit of ROBEX
200 LC Excavator from respondent Autocorp Group. The original cost
of the unit was P2.5m but was increased to P3,112,519.94 because it
was paid in 12 monthly installments. Both sales agreements
(embodied in the Vehicle Sales Invoice No. A-0209 and Vehicle Sales
Confirmation No. 258) were signed by Francis Yu, president of Seaoil,
on behalf of said corporation. Furthermore, it was agreed that
ownership was to remain with Autocorp until the obligation is fully
settled. In this light, Seaoil’s contractor, Romeo Valera, issued 12
postdated checks. However, Autocorp refused to accept the checks
because they were not under Seaoil’s name. Hence, Yu, on behalf of
Seaoil, signed and issued 12 postdated checks for P259,376.62 each
with Autocorp as payee. After the delivery of the excavator, the
remaining 10 checks were not honored by the bank since Seaoil
requested that payment be stopped. Despite repeated demands,
Seaoil refused to pay the remaining balance.
Autocorp filed a complaint for recovery of personal property with
damages and replevin in RTC. In Seaoil’s answer, it alleged that Seaoil
and Autocorp were only utilized as conduits to settle the obligation of
one foreign entity named Uniline Asia, in favor of another foreign
entity, Focus Point International, Incorporated. Rodriguez is a
stockholder and director of Autocorp. He is also the owner of Uniline.
On the other hand, Yu is the president and stockholder of Seaoil and
is at the same time owner of Focus. Allegedly, Uniline chartered MV
Asia Property in the amount of $315,711.71 from its owner Focus.
Uniline was not able to settle the said amount. Hence Uniline,
through Rodriguez, proposed to settle the obligation through
conveyance of vehicles and heavy equipment to be procured from
through Rodriguez, owed money to Focus. In lieu of payment, Uniline
instead agreed to convey the excavator to Focus. This was to be paid
by checks issued by Seaoil but which in turn were to be funded by
checks issued by Uniline. It further claims that when Rodriguez issued
a stop payment order on the 10 checks the former was also
constrained to order a stop payment order on the PBCOM checks.
RTC ruled that the transaction between Autocorp and Seaoil was a
simple contract of sale payable in installments and held that the
obligation to pay plaintiff the remainder of the purchase price of the
excavator solely devolves on Seaoil. CA affirmed the decision of RTC. It
held that the transaction between Yu and Rodriquez was merely
verbal and cannot alter the sales contract between Seaoil and Autcorp
as this will run counter to the parol evidence rule which prohibits the
introduction of oral and parol evidence to modify the terms of the
contract. The claim that it falls under the exceptions to the parol
evidence rule has not been sufficiently proven. A petition for
certiorari was filed.
ISSUE:
Whether or not CA erred in applying parol evidence rule to prove only
some terms contained in one portion of the document since the same
does not reflect the true agreement of the parties.
RULING:
No. Petitioner does not question the validity of the vehicle sales
invoice but merely argues that the same does not reflect the true
agreement of the parties. However, petitioner only had its bare
testimony to back up the alleged arrangement with Rodriquez.
Unsubstantiated testimony offered as proof of verbal agreement
which tends to vary the terms of a written agreement, is inadmissible
under the parol evidence rule. This rule forbids any addition or
contradiction of the terms of a written agreement by testimony or
other evidence purporting to show that different terms were agreed
upon by the parties, varying the purport of the written contract unless
it falls under one of the exceptions as provided under:
SEC. 9. Evidence of written agreements.When the terms of an agreement
been reduced to writing, it is considered as containing all the terms
there can be, between the parties and their successors-in- interest, no evidence of such
terms other than the contents of the written agreement.
within the exception to the parol evidence rule is untenable. The
exception obtains only where the written contract is so ambiguous or
obscure in terms that the contractual intention of the parties cannot
be understood from a mere reading of the instrument. In such a case,
extrinsic evidence of the subject matter of the contract, of the
relations of the parties to each other, and of the facts and
have circumstances surrounding them when they entered into the contract
agreed upon and
may be received to enable the court to make a proper interpretation
of the instrument.

However, a party may present evidence to modify, explain or add to the
terms of the written agreement if he puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written
agreement;
(b) The failure of the written agreement to express the true intent and
agreement of the parties thereto;
SC further stated that the transaction under the Vehicle Sales Invoice
is separate and distinct from that under the Lease Purchase
Agreement. In the former, it is Seaoil that owes Autocorp, while in the
latter, Uniline incurred obligations to Focus. There was never any
allegation, much less any evidence, that Autocorp was merely an alter
ego of Uniline, or that the two corporations’ separate personalities
were being used as a means to perpetrate fraud or wrongdoing.

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors-
in-interest after the execution of the written agreement.

The term "agreement" includes wills.

The Vehicles Sales Invoice is the best evidence of the transaction. It is

considered a business form that is commonly recognized in ordinary
commercial transactions as valid between the parties and at the very
least serves as an acknowledgement that a business transaction has I
fact transpired.

In here, the terms of the subject sales invoice are clear. They show
that Autocorp sold to Seaoil one unit of Excavator paid for by checks.
The fact that Seaoil as represented by Yu is the customer or buyer
cannot be denied. Petitioners contention that the document falls